Alaska gas pipeline sponsors plan new effort to seek potential customers

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Researcher/Writer, Office of the Federal Coordinator
Release Date: 
July 30, 2012

The sponsors of a major natural gas pipeline project from Alaska's North Slope said today they will conduct a nonbinding public solicitation of interest in the project from potential gas shippers.

The Alaska Pipeline Project — a partnership of TransCanada and ExxonMobil — said they will conduct their solicitation between Aug. 31 and Sept. 14. TransCanada holds a state license under the Alaska Gasline Inducement Act (AGIA) to pursue a gas pipeline project.

The partnership is looking at two possible pipeline projects. One would pipe gas to a liquefaction plant at tidewater in Southcentral Alaska, roughly 800 miles south of the North Slope fields. Asia would be the primary market for the LNG exports. The partnership also will solicit interest in shipping gas about 1,700 miles down a pipeline to a point near the border of British Columbia and Alberta in Canada. From there the gas could be routed into the North American gas pipeline grid for delivery to customers.

APP conducted a binding open season in 2010 seeking customers for either an LNG project or a pipeline to Alberta. On May 3, 2012, the partnership formally closed that effort in a filing with the Federal Energy Regulatory Commission. "During the open season, [North Slope] producers expressed significant interest in the Alberta Project in the form of conditioned bids for capacity on that pipeline," the partnership said in its FERC filing. "That interest led to concerted negotiations for many months between APP and the producers. Despite the good faith efforts by all parties to such negotiations, however, no precedent agreements for transportation service on the Alberta Project have been executed."

Just over a month earlier, on March 30, ExxonMobil and the two other major North Slope producers — ConocoPhillips and BP — said they would work together and with TransCanada to look again at a possible LNG export project.

On May 2, an agreement with the state of Alaska under AGIA committed APP this year to solicit North Slope producers, oil and gas explorers, LNG terminal developers and others for their interest in an LNG export project.

The upcoming solicitation of interest will be less formal than the 2010 open season solicitation because any commitments made will be nonbinding. In its announcement today, APP said its new solicitation of interest will be conducted in accordance with AGIA, which requires TransCanada "to assess market interest in a pipeline transportation system for Alaska North Slope gas every two years after its first open season."

TransCanada/ExxonMobil noted in today's announcement that it "has set a high priority on providing access opportunities for in-state natural gas to heat and power local homes, business and industry. All options being pursued under AGIA provide for a minimum of five delivery points [along the pipeline] for local natural gas connections in Alaska."

Alaska's North Slope fields have been producing oil since 1977. But the estimated 35 trillion cubic feet of natural gas reserves have been mostly stranded for lack of a multibillion-dollar investment to process the gas and pipe it to market.

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